It had to happen sooner or later, even to Apple (AAPL: sentiment, chart, options). When you build a product as successful as the iPod, eventually the market gets saturated and demand begins to fall. It is just such a conclusion that analysts are beginning reach when it comes to Apple's iconic iPod, according to a report at Silicon Alley Insider. Specifically, Piper Jaffray expects Apple to ship 18.6 million iPods this quarter, 16% less that it did the year prior. As SAI notes "The decline would cap off years of declining December quarter iPod shipment growth: 525% in 2004; 207% in 2005; 50% in 2006; and 5% in 2007."

But, I can see the emails pouring in now: "You forgot about the iPhone!" Yes, Apple still has the iPhone to fall back on, and it is selling well, with shipments up 2.3% from last year. However, the device now has plenty of competition in the smartphone market, such as Research In Motion's (RIMM) Storm, and various offerings from LG. Furthermore, the economic downturn is already hurting sales of smartphones across the industry.

You can already see the cracks forming at Apple; a Dow Jones News Wire noted today that Chief Financial Officer Peter Oppenheimer gave a muted forecast for Apple's current quarter - typically the best quarter of the year for the company. According to the report, Oppenheimer said that Apple would be "prudent" with its expectations, stating that AAPL should earn between $1.06 and $1.35 per share on $9 billion to $10 billion in revenue. Analysts are currently expecting a profit of $1.43 per share for the quarter.